Lowe's Shareholders Reject 'Poison-Pill'

Published 8:00 pm, Thursday, May 29, 2003

Lowe's Cos. shareholders on Friday approved a union-sponsored measure that asks the company's board to either cancel an antitakeover "poison-pill" plan or obtain approval for it from shareholders.

Shareholders holding 58 percent of shares voted for the change.

The poison-pill plan was first adopted in 1988 and renewed in 1998, both times without shareholder approval.

The plan gives the board veto power over any proposed merger, according to a supporting statement by the Trowel Trades S&P 500 Index Fund, which owns 15,500 Lowe's shares and proposed the change.

"Frankly, we feel shareholders should be able to look out for ourselves, or at least be allowed to decide whether to rely on ourselves or the board," said Thomas F. McIntyre of the International Union of Bricklayers and Allied Craftworkers during the meeting. The Trowel Trades Index Fund is among the funds holding investments for the union's $1 billion pension fund.

Lowe's Chairman and Chief Executive Robert Tillman said after the meeting that the board must now decide whether to drop the plan or continue it through its 2008 expiration and then bring it before shareholders.

The board recognizes shareholders have spoken and would find it difficult to do anything but try to address shareholders' concerns, he said.

Lowe's board, in its proxy, had argued against the proposal, saying the rights plan gives directors more time to negotiate and make a decision in any transaction involving a change of control.

In addition, the company said, there is no empirical evidence such plans hurt shareholder value by discouraging takeovers that could be beneficial to holders. Indeed, shareholder-rights plans are designed to enhance shareholder value, the company had argued.

McIntyre, the union representative, said after the meeting he was pleased with the vote and with Chairman Tillman's recognition that the board should respond.

"Shareholders are clearly sending a message," he said.

A second shareholder proposal, to amend company bylaws to require that the chairman be an independent director who hasn't been a company officer, failed.

A third shareholder proposal had asked for the third year that Lowe's adopt global workers' rights standards for its suppliers and allow third-party monitoring of compliance was also rejected.

Lowe's shares closed Friday at $42.26, up $1.17, or 2.8 percent, on the New York Stock Exchange.